JSW May Part­ner Pi­ra­mal-Bain Fund to Bid for Bhushan Steel

Fi­nal ne­go­ti­a­tions on be­tween Jin­dal co and fund to put in joint bid for ail­ing steel maker

The Economic Times - - Front Page - 1 550 100

Mum­bai: Bil­lion­aire Sa­j­jan Jin­dal’s flag­ship JSW Steel is in ad­vanced talks with a dis­tressed fund jointly floated by Pi­ra­mal En­ter­prises and Bain Cap­i­tal Credit to bid for Bhushan Steel, which has re­cently been ad­mit­ted to bank­ruptcy courts for pos­si­ble re­vival.

“Both par­ties are in the fi­nal stages of ne­go­ti­a­tions to put to­gether a joint bid for the dis­tressed steel maker,” said a per­son close to the trans­ac­tion. Bhushan is one of the 12 com­pa­nies re­ferred to bank­ruptcy courts by a Re­serve Bank of In­dia order in June.

In­dia’s largest steel maker JSW Steel has been eye­ing Bhushan Steel for more than a year now as it strives to ramp up out­put to 40 mil­lion tonnes in the next decade through ca­pac­ity ad­di­tion as well as ac­qui­si­tions.

Jin­dal has a proven track record of turn­ing around stressed busi- SBI + Brook­field As­set Man­age­ment $ BIL­LION

IL&FS + Lone Star $ MIL­LION

JC Flow­ers and Co + Am­bit Hold­ings $ MIL­LION

ICICI Bank + Apollo In­dia Credit Opp Mgmt + AION Cap­i­tal Not Announced

Any cred­i­tor(s) can ap­ply for in­sol­vency pro­ceed­ings against a de­fault­ing corporate

IP takes over run­ning of the com­pany

nesses. He had ear­lier ac­quired Is­pat Steel and South­ern Iron & Steel Com­pany, and re­vived both. JSW of­fi­cials are hop­ing to ef­fect a sim­i­lar turn­around for Bhushan.

Bhushan Steel’s to­tal debt stands at about .₹ 42,355 crore and its ef­forts to find a part­ner have come a crop­per so far. JSW Steel and Bhushan Steel did not re­spond to emailed queries while Pi­ra­mal En­ter­prises re­fused to com­ment on ‘spec­u­la­tion’.

IP gets 180 days to of­fer a so­lu­tion. Pe­riod can be ex­tended by 90 days

Any res­o­lu­tion pro­posal can be im­ple­mented only if 75% of cred­i­tors ap­prove it

The Ap­pli­ca­tion: Mora­to­rium: Credit Com­mit­tee:

Bhushan Steel, which pri­mar­ily makes auto-grade steel, is ma­jor­ity owned by the Sin­gal fam­ily. The com­pany has been ad­mit­ted by the Na­tional Com­pany Law Tri­bunal, and now there’s a 180-day time­line that can be ex­tended up to 270 days to de­cide on a res­o­lu­tion plan in ac­cor­dance with the In­sol­vency and Bank­ruptcy Code. The In­dian steel in­dus­try is show­ing signs of re­vival af­ter a par­tic­u­larly tough year dur­ing which it fended off Chi­nese im­ports. The gov­ern­ment’s fo­cus on in­fra­struc­ture and af­ford­able hous­ing has helped stoke de­mand while anti-dump­ing moves have helped the lo­cal in­dus­try.

Pi­ra­mal and Bain’s dis­tressed as­sets fund was floated in Au­gust 2016 and has a cor­pus of about $750 mil­lion, with an op­tion to in­crease it to $1 bil­lion. It seeks to in­vest in busi­nesses that re­quire re­struc­tur­ing and have fun­da­men­tally strong growth prospects linked to In­dia’s in­fra­struc­ture and con­sump­tion needs. If the deal goes through, Bhushan Steel would be its first in­vest­ment. “We think the re­cent bank­ing re­forms fo­cused on ef­fec­tive and timely res­o­lu­tion of stressed as­sets au­gur well for play­ers like us,” Pi­ra­mal En­ter­prises chair­man Ajay Pi­ra­mal had said last year at the fund’s launch. In­vestors — both lo­cal and for­eign — are in­creas­ingly show­ing in­ter­est in the coun­try’s stressed as­sets due to im­proved mar­ket sen­ti­ment and in­tro­duc­tion of IBC even as gross non-per­form­ing as­sets (NPAs) have swelled to .₹ 7.7 lakh crore, as on March 31, 2017, rep­re­sent­ing 9.6% of the to­tal bank­ing in­dus­try loans.

Re­cently, one of In­dia’s largest in­fra­struc­ture lender, In­fra­struc­ture Leas­ing & Fi­nan­cial Ser­vices Ltd (IL&FS), formed a joint in­vest­ment plat­form with Amer­i­can pri­vate eq­uity fund Lone Star to bid for stressed in­fra­struc­ture projects in the coun­try. The plat­form would have a cap­i­tal pool of $550 mil­lion. Global stressed as­set spe­cial­ist JC Flow­ers and Co, in part­ner­ship with Am­bit Hold­ings, has ap­plied to set up an as­set re­con­struc­tion com­pany.

Megha Man­davia & Baiju Kalesh

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